Sri Lanka officially launched LANKAQR code-based payments backed by a dedicated island wide promotional campaign with participation of the banking sector, which is expected to attract the country’s Small and medium-sized enterprises (SMEs) to engage in digital transactions.
The Central Bank (CB) commenced development of the national QR code for transactions in 2017. In the following year, it issued standards for the national QR code transactions.
The most of the country’s SMEs were not able to offer digital transactions for their customers due to high cost of acquiring a point of sale (POS) machines and high operational costs involved, According to the CB, Director (Payments and Settlements), Dharmasri Kumaratunge.
A cost of a POS machine range between Rs 50,000-70,000 and businesses are subjected to 2-3.5 percent Merchant Discount Rates (MDR) and a monthly rental up to Rs 3000.
He noted that despite the high penetration of debit and credit cards, the country only has 83,000 POS machines mostly concentrated in Colombo and Gamapha Districts.
However, he pointed out that QR based transactions are a low-cost solution as the maximum MDR – fees paid by merchant to the bank that issues the LANKAQR code has been limited at 1% by the CB with a special rate of 0.5 percent during this year to further encourage merchants to adopt LANKAQR.
LANKAQR allows customers to make direct payments to their merchants from their respective bank accounts using a LANKAQR compliant mobile payment app, which could be on a feature phone or smartphone and the payment instantly get credited to the merchant.
Nearly all local banks three finance companies and two mobile money operators have joined the national QR system with them acquiring almost 50,000 merchants.
The CB targets to onboard up to 25 merchants from one bank branch, with expectations of some branches acquiring more merchants.
With this imitative, the CB aims to reduce costs involved with physical currency, to promote financial inclusiveness and to bring into SMEs in informal sector to the formal sector. In addition, the imitative would also support the CB’s aim to transform Sri Lanka to a cashless society.
The CB together with the stakeholders are planning to run a campaign to attract more businesses to adopt QR code base payments from 10th of October.